New Law Will Improve Medicare Reimbursement for Central Coast Physicians

President Barack Obama on Tuesday signed into law a bill that included a provision long championed by Rep. Lois Capps, D-Santa Barbara, to adjust Medicare reimbursement rates so that they more accurately reflect the actual cost of practicing medicine on the Central Coast.

The fix, which Capps had supported and pushed for more than a decade, will solve a long-standing problem in which counties — including Santa Barbara and San Luis Obispo — are mislabeled as rural, resulting in health-care providers being reimbursed at a lower rate for the care they provide in the Medicare program.

The GPCI problem dates back to 1966 when counties were either designated as “rural” or “urban.” Those designations were never changed, so doctors practicing in counties that have grown since then are being compensated at significantly lower levels than they should. There are 14 California counties — including Santa Barbara and San Luis Obispo County — whose Medicare providers are being underpaid by as much as 10 percent a year, according to the California Medical Association.

“This is an important win for Central Coast doctors and the senior they care for,” Capps said. “I have worked with Central Coast physicians for over a decade to correct this issue, and today’s bill signing is a direct result of those efforts. The GPCI system has been unfair for too long, and I am so pleased that this issue will finally be behind us.”

The GPCI fixed signed into law would require California Medicare reimbursements to move from the urban/rural designations from 1966 to calculation based on Metropolitan Statistical Areas, which they currently use for hospital payments and more accurately reflect the cost of practicing medicine. The higher payments would be phased in over a six-year period starting in 2017.

The provision was included in legislation to temporarily block large cuts to Medicare provider reimbursement scheduled to occur under the sustainable growth rate formula. This year-long temporary fix was passed into law after the derailment of legislative efforts to permanently fix the flawed Medicare Sustainable Growth Rate through bipartisan legislation. Capps was a strong supporter of this permanent, bipartisan effort (H.R. 4015, the SGR Repeal and Medicare Provider Payment Modernization Act), but she voted against the legislation after it was amended to include a long-term delay of the individual responsibility requirements included in the Affordable Care Act. The non-partisan Congressional Budget Office estimated this coupling would result in an extra 13 million Americans going without health insurance and was largely panned by medical groups.

Currently, the SGR formula is used to determine Medicare payments to physicians. The formula has called for reductions in physician payment rates since 2002, which Congress has consistently overridden for more than 10 years, costing nearly $150 billion. Under the SGR, Medicare physician payment rates would have been reduced by about 24 percent in April of this year if not for the doc fix.

This was the 17th temporary fix in the past 11 years.

“I’ve said it before and I will say it again: we need to pass permanent fix to the flawed Medicare Sustainable Growth Rate,” Capps said. “For the first time, we have a bipartisan solution to this issue, but the House Majority derailed the final negotiations in the name of partisanship. This temporary patch will only increase the cost of permanent repeal and only serves to kick the can further down the road, even though permanent solution was within reach. I hope that we can and will go back to work to find a permanent solution to this issue and get it done this year.”

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